Floating Exchange Rate


China is taking a major step today towards integrating their currency (RMB) into the worlds foreign exchange market. The controlled peg set by their government has been allowed to float within a marginal band against a small basket of currencies around a fixed rate since 2005. The government has announced that they will gradually increase its flexibility and this latest announcement seems to confirm that. The undervaluing of the currency has been said by some to unfairly allowed China to con…

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